Better to be on the market than just in it!

I well remember (some years ago) attending a real estate conference where the message was “success leaves clues”. Just one week ago we heard that Australia had avoided a technical recession. The same can be said for some real estate agencies that are individually turning market sentiment around with respective niche markets (suburbs) now moving from negative price expectations to positive sales results.

A common theme in business is judgement by individual results that resonate within the public gallery of observation and real estate markets worldwide have a massive number of adjudicators, both negative and positive.

One month ago I wrote, that in our opinion, the Mosman market had bottomed. Today, this coincides with another problem that highlights the shortage of new properties.

Tim Mooney Photography – Taronga Zoo, Mosman

For those real estate addicts there are always interesting blogs concerning the Australian real estate industry on www.business2.com.au. There are plenty of inside real estate commentaries and debates are often heated – well worth a subscription and it’s free!

In the 2009 Mosman market (thus far), distressed vendor volumes have not eventuated, despite ongoing critical evaluations from many in the public gallery. The banking fraternity has now dismissed speculation (and expectations for that matter) that this financial crisis was a storm that simply could not weathered. How wrong was that theory?

With the passage of time, we are now starting to see our property markets stabilise and indentify upward price growth.

We publish every sale we execute http://www.rwm.com.au/sales-list/sold_listing/. Others ‘invent’ sales and make media announcements with no evidence to support such claims. Hey Presto or Pinocchio’s property announcements? Without clarification such claims remain on the nose!

Our subscriber sales climbed this week to $876,114,019 (up $17,020,020 from last week). Over the past two weeks, we have executed $27,320,009 in sales to subscribers of Virtual Realty News only. We don’t include our other sales where vendors/purchasers are not subscribers – see our recent sales pages.

It would be reckless in our opinion, for real estate agents in Mosman to suggest to vendors that prices will only get lower. Rather be on the market than just in it and for the record, RWM has transacted the highest volume of Mosman house sales in 2009 – more than any other local real estate agency.

What many forget is the simple market philosophy of meet and greet. As a vendor, you can’t greet the market if one refuses to meet it. Our recent sales successes have evolved because we found the competition instead of blaming the dark cloud of the Global Financial Recession.

This analogy also applies to advertising where ‘online’ in 2009 is the peak performer. Print media, formerly a print meat market, has lost vendor appeal. It now has to compete with the ever evolving online markets where interactive social networking is the preferred option of consumers.

They say in rugby circles “use it or lose it” and the best advice I can offer to print publications is, “if you can’t beat ‘em – join ‘em”. There is still a vital role for print to play in real estate. I believe however, that the answer is classified advertising used as a directory to point consumers to more advanced and informative online presentations.

Rupert Murdoch announced this week that he believes that within a decade (I think three – five years) that the majority of newspapers will be delivered electronically. Mr Murdoch said, “If you’ve got a newspaper with a great name and great reputation, and you are trusted, the people in that community are going to need access to your source of news.”Mr Murdoch said, “This can all be served digitally and much more cheaply than it is now in a newspaper.” In an average week RWM would send up to 100,000 (sales and rentals) emails to clients on our database.

The Westpac – Melbourne Institute index of consumer sentiment rose 12.7 per cent to 100.1 points in June as a result of the strong economic growth figures recorded in the March quarter 2009. In May, the index recorded 88.8 points so a recorded index above 100 points has happened for the first time in seventeen months. As the mature markets rebound, a large proportion of this growth can be attributed to first – home buyers who could be called ‘the crash test babies’.

There is a clear message in the following graph which identities that the average first-home loan in NSW has increased by more than $50,000 (market competition). In just over a year, the average loan has increased to $300,000, thanks to record low interest rates and government hand-outs. The cheapest home loan currently available is with the Commonwealth Bank (CBA) at 5.64 per cent. The long – term cost of funding is increasing, which explains why (since January 2008) the CBA has held on to 0.82 per cent of net official Reserve Bank of Australia cash rate reductions.

In April 2009, home loans to first – home buyers reached a 14 month high as the dash for cash handouts from Federal and State Governments reached fever-pitch. The numbers taking out first time home loans jumped to 28 per cent in April – the highest share to first home buyers since the Australian Bureau of Statistics commenced recording in 1991.

Overall, home loan approvals have risen consecutively for the last seven months. Oh dear…. artificially inseminating property markets with the probability of an early election will equate to carnage for enthusiastic and naive property market debutants.

Ross Greenwood wrote a brilliant article on Money News. “Right now the Federal Government is at pains to tell everyone – including us the mug – punters to the International Monetary Fund that it will not exceed its own, self – imposed, borrowing limits. How much? $200 billion. And here’s a worry. If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily.

But every dollar that is borrowed, some time, has to be repaid. By you, by me and by the rest of the country.

Just after 5 o’clock tonight I did a bit of maths for Jason Morrison. But it’s so staggering its worth repeating now. First though … here’s what Chairman Rudd has been saying about – what he calls – these temporary borrowings. Remember those words … temporary deficit … but the total Government debt could end up around $200 billion.

So here’s a very basic calculation … I used a home loan calculator to work it out … it’s that simple.
$200 billion is $200 million. The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of twenty years.

Now here’s where it gets scary … really scary.

The repayments on $200 billion come to more than one and a quarter billion dollars – every month – for 20 years. It works out we – as taxpayers – will be repaying $15.4 billion in interest and principal every year … $733 for every man woman and child – every year.

The total interest bill over the 20 years is – get this – $108 billion.

And remember, this is a Government that just 18 months ago had NO debt … NO debt. In fact it had enough money to create the Future Fund to pay the future liabilities of public servants superannuation … and it had enough to stick $20 billion into the Building Australia Fund last year …” Oh dear …

The Australian Bureau of Statistics reported this week, that unemployment in Australia was up to 5.7 per cent. NSW lead the country in May, with 6.4 per cent. Of greatest concern is that with first home buyers, Ruddy Fantastic has been shaking his sauce bottle for an election party of mammoth proportions that will see heads spinning with an almighty hangover. Much like Nation Building which is being watched closely – with interest!

4 Responses to “Better to be on the market than just in it!”

Its good to read a positive article on Mosman house prices and one that tries to establish credibility in the numbers being reported BUT as almost all vendors are asking for their sale proces to remain confidential, no one really knows what the story is! Are houses moving at good pirces? I suggest until the market communications becomes more open its hard for us “punters” to really know.

The upper of the residential market has always weather the storm..I wonder what will start once the first wave of rate increase imposed by CBA today will do to the overall market…Will the other lenders follow? I guess so…costs of funds are still way to high and lenders are working on thin margins with some at a loss…Interesting times ahead indeed.

Those numbers will mean that the achievers in Australia especially the retirement lobby will work an additional 20 years to help pay the debt good way to make sure we all die early ( this will resolve the health crisis ) !!! What a wonderful PM we have he should be in charge of the local piggy bank and you can be assurred he would get that wrong too!!!!!!!